DC4MS

Destination clubs move into market

Brent Gardner-Smith - Aspen Daily News Staff Writer

Wed 10/31/2007 07:01AM MST

Aspen Daily News | Aspen, Colorado

Wealthy skiers now have another option when it comes to luxury ski resort vacations.

"Destination clubs" are growing rapidly and seven of them own or plan to buy luxury properties in Aspen and Snowmass for their members to enjoy.

"Destination clubs create a steady, reliable stream of affluent visitors," said Steve Greer, the founder of the LUSSO Collection, which recently bought a townhome at Aspen Highlands and hired a full-time local concierge to serve its members.

The destination clubs work like country clubs, with members paying roughly $325,000 to join and then paying about $20,000 in annual dues, depending on the club and the levels of membership.

In exchange, members get to stay up to 45 days in luxury properties at ski, beach or golf resorts — or in cosmopolitan cities — often at short notice and without additional fees.

The clubs say the arrangement can be less expensive and simpler than a second home and offers more variety than a fractional buy.

"Our membership says they love showing up without a to-do list and leaving without a to-do list," said Ben Addoms, a founder and executive vice president with Quintess, which has over 400 members and 70 properties in 30 destinations. "People seem to love the variety and convenience and there is a lot less capital expenditure than with a second home."

The clubs buy resort real estate with their member's combined initial payments and then cover property management, cleaning and concierge service with the annual dues.

Club operators expect the concept to grow and many are bullish on Aspen and Snowmass.

Who owns what in Aspen/Snowmass

Exclusive Resorts, the largest of the growing list of destination clubs, owns a townhome at Two Creeks and a large block of time at the Timbers Club.

The Portofino Club, which has lots of Front Range members, owns a condo at the Snowmass Club and plans to buy up to five more properties here, mainly in Snowmass.

Quintess, which recently merged with "The Leading Residences of the World," has three properties in Aspen and has plans to add more.

The LUSSO Collection just bought a townhome in the Thunderbowl neighborhood at Highlands and will likely expand here.

The Solstice club has two homes in the West End, which are popular in both the winter and summer months.

The High Country club has a ski-in, ski-out condo in Snowmass. And the Oyster Circle club plans on buying property here.

"One of the reasons you will see us adding more and more homes in Aspen is that people really love the Aspen experience," said Addoms.

How clubs work

For members, destination clubs are an expense, not an investment.

The club's organizers, not its members, typically receive any real estate windfall when resort real estate properties are eventually sold.

Members, on the other hand, get flexibility.

Many clubs will return up to 80 percent of their initial membership fee back as other members join.

And they get service. When they arrive at a resort, club members will, in many cases, be greeted by a local concierge who will take care of details like grocery shopping, buying lift tickets, making dinner reservations, etc.

Clubs say most members do a fair amount of research before making a decision about which destination club to join.

An independent organization called the Helium Report has a "decision guide to destination clubs" with a list of 50 "due diligence" questions, including "how many residences are owned and operated?," "who is able to book or use the home?," and "what hospitality experience does the management team have?"

More information is at heliumreport.com.

A young industry

"This industry, this concept, didn't exist five years ago," said Todd Harris, senior vice president of member services and hospitality for Exclusive Resorts. "And I think we've hit a sweet spot here. There is demand in the affluent market for the product."

Harris worked for years at the Ritz Carlton Club in Beaver Creek before joining Exclusive.

"I really started to see a shift in how affluent people were taking vacations," he said. "Hotel rooms were not cutting it and second-home ownership was very expensive and somewhat restrictive."

Exclusive Resorts is now the largest of the destination clubs and one of its primary backers is Steve Case, formerly of AOL and Time Warner.

Exclusive has different levels of membership. The club's lower levels don't have as much access to prime properties, such as ski properties, at Christmas time.

An "elite" membership at Exclusive requires a $459,000 membership fee and annual dues of $35,000 a year. In return, members receive 45 days at their choice of properties.

The club currently owns a ski-in, ski-out townhome near the Two Creeks portal at the Snowmass Ski Area and owns a large block of time at the Timbers Club in Snowmass.

They also own property in Vail, Beaver Creek, Telluride, Deer Valley, Jackson Hole, Lake Tahoe, Whistler and the French Alps.

That list of ski resorts is similar to many of the other destination clubs.

And those resorts are increasingly gaining a luxury reputation that other Rocky Mountain resorts, such as Crested Butte, Winter Park and Durango, are not.

Trend could mean more hot beds

The trend means that an increasing number of homes and condos in the Aspen area could be owned by a destination club.

And because the clubs like to see their resort properties occupied by their members, those homes and condos might see more activity than a typical "second" home that is not in a rental pool.

"We have great usage in our homes," said Harris. "Clubs like ours bring people to Aspen all year-round."

Occupancy at resort properties owned by Quintess is around 80 and 85 percent.

"We're booked every day in the busy seasons," said Addoms of Quintess. "It is definitely not one of those issues where a second home is sitting empty most of the time."

Club operators say that when their wealthy members arrive at a resort, they are ready to spend money.

"They spend more than any other resort guests," said Addoms of Quintess. "You feel like your accommodations are already paid for."

Destination club membership is often seen as an alternative to second home ownership, which sometimes people find isn't as relaxing as it originally sounded.

But that doesn't mean the owners have sold that second home.

"Fifty percent of our members have a second home and a third home and they like those," said Greer of The LUSSO Collection, which currently has 100 members, 20 properties, a membership fee of $395,000 and annual dues of $26,500. "But they do this for the variety. And others are doing it instead of buying another home, which they don't think they will use enough. And they don't want to always visit the same place."

Bullish on the concept

The clubs all expect to grow, primarily through word of mouth.

"The market for destination clubs is significantly higher than the market for fractionals," said Greer. "Fractionals make sense for people who know they want to go to a specific place every year. But, also, there is still not a proven resale market for fractionals."

The baby boomers are a prime market for the destination club concept.

"I think its future is based on the number of people who experience this and recommend it to their friends," said Ron Tapp, co-founder and chairman of Portofino Club, which owns a condo at the Snowmass Club and has about 150 members, with about 60 of them living on Colorado's Front Range. "Baby boomers like variety and they like to be taken care of. And this whole package, especially after you experience it, is very nice."

And growth means more clubs buying more property.

"I think all the destination clubs will have a significant presence in Aspen and Snowmass," said Tapp. "The idea is to have critical mass in every location. For us, that means we will have five to eight properties in a location. It is beneficial because it makes sense to keep property managers, the cleaning staff, and a concierge busy with a group of properties."

Other ski resorts also popular

"Deer Valley is a big destination for us," said Harris of Exclusive, which now has 17 properties in Deer Valley, most of them single-family homes.

One of the most attractive things about Deer Valley is the easy air access through Salt Lake City.

Beaver Creek is also very popular, especially with Exclusive's members.

"A lot of our members that travel with kids are looking for the white-glove vacation experience and both Beaver Creek and Deer Valley do an excellent job with that," Harris said.

Harris says that his members are expressing more interest in Deer Valley and Beaver Creek than Snowmass Village.

"I think Snowmass is going to be a Deer Valley and Beaver Creek real soon," Harris said. "But I don't think it appeals to the luxury traveler just yet. Snowmass is missing the foundation of a five-star hotel like a Four Seasons," said Harris.

But he recognizes that might change as The Little Nell Snowmass and a new Viceroy hotel are under construction.

bgs@aspendailynews.com